When my friend started talking about Rich Dad, Poor Dad, I got really intrigued but not so keen in flipping through the pages. I just thought that it’s just going to be a semi-biography of a father and a son, their conflicts, and the steps they took so they can resolve their issues. However, it’s only with his constant prodding that I decided to give in, and boy, was I thankful! It wasn’t just inspirational but is filled with a lot of strategies on not only how to earn but how to become an effective income earner. It was also Robert Kiyosaki who introduced a new radical method of classifying income earners these days. He illustrated it through the cash flow quadrant:



E
Employed B
Business Owner
S
Self-employed I
Investor

Let’s discuss each one properly:

1. The E Quadrant or the Employees. Majority of the people who are earning belong to this quadrant. They earn for the services they rendered to the company or the individual. The salary is fixed; however, the security is very high. That’s why they are finding a difficult time to move on to other quadrants, such as the S (self-employed) or the B (business owner). If you are an employee, you should know that you are only paid of at most 65 percent of what you’re worth. If the client will decide to give you more than that, they will start getting losses rather than profits. Employment has become a usual course of action after earning a degree. Nevertheless, because of the many business opportunities available, you can now have the option to spend at most 5 years in a company.

2. The B Quadrant or the Business Owner. The business owner is a person who can actually come up with a business and generate unlimited cash flow with the least amount of supervision. This is the route that everybody wants to take—and I believe you should too—simply because you have more control of your money, time, and effort. However, you need to keep in mind one thing: not all business owners are successful because they have chosen to take the high-risk venture. This is a business that needs huge amounts of capital, high turnover rate, and the biggest chance of failing.

3. The S Quadrant or the Self-employed. These are professionals and highly skilled individuals such as accountants, lawyers, doctors, and real estate agents, to name a few. The good thing about being a self-employed person is you have more command of your time. You can also dictate how much you want to earn for yourself. The downside, though, is that you will only earn when you work. When you don’t, you cannot expect anything. And it doesn’t really matter what field you are in.

4. The I Quadrant or the Investor. This is where passive income comes in. The business owner can travel and do different kinds of activities as the business may only require less attention from him. However, if you’re going to remove himself/herself from it, the business will surely die. The Investor is a person who invests his/her money on something that can generate income with minimal to even zero effort. You may, however, put a good amount of skill and strategy at the early stages.

A person, to obtain freedom and earn unlimited income, should definitely get out of being in the E Quadrant and slowly move to the S Quadrant. Nevertheless, since income will only happen when you work, and you are looking for financial independence, you should be either in the B or I quadrants.

Generating Multiple Streams of Income

Perhaps you’ve heard me saying a couple of times about multiple streams of income. As a matter of fact, I’ve mentioned it in chapter 3, when we talked about “How to Get Money and Make More Money.” But what I’ve failed to emphasize, though, is the fact that it’s completely possible to be earning 24 hours a day, 7 days a week—yes, even when you’re sound asleep or when you’re basically doing nothing at all.

But before we proceed any further, you should remove from your mind the basic concept of earning: when you need to work doubly hard so you can earn just as much. The idea of multiple streams of income is radical and can be pretty overwhelming at times. Nevertheless, when you get to apply them at least one at a time, you will realize that they are very simple, and yet the rewards are great.